19th March, 2018

Frequently asked questions about Pradhan Mantri Garib Kalyan Yojana (PMGKY)

Pradhan Mantri Garib Kalyan Yojana (PMGKY) Frequently Asked Questions

1) What is Pradhan Mantri Garib Kalyan Yojana (PMGKY)?

Pradhan Mantri Garib Kalyan Yojana (PMGKY) is a scheme which provides persons having undisclosed income in the form of cash or deposit in an account (with bank or post office or any other specified entity) to declare such incomes by paying tax, penalty, surcharge including a mandatory deposit. PMGKY is a constituent of the Taxation Laws (Second Amendment) Bill, 2016.

2) When and why was the PMGKY scheme introduced in India?

PMGKY scheme was introduced by the central government after demonetisation on December 17, 2016 with the aim to unearth black money in circulation and bring it back to the system.

3) Who is eligible to declare their undisclosed income under PMGKY?

Any person who declares undisclosed income under sub-section (1) of section 199C of the Taxation and Investment Regime for PMGKY, 2016 is eligible to deposit unaccounted money under this scheme.

4) What is the rate of tax, surcharge, penalty and deposits payable by the defaulter on declaring undisclosed income?

On the declared undisclosed income, tax at 30% of income, surcharge at 33 % of tax, penalty at 10 % of income is payable by such person, totaling to 49.9 % of the income declared. In addition to 49.9 % tax liability, at least 25 % of the declared income has to be compulsorily deposited in the PMGKD scheme, 2016.

5) In what form will the 25 % deposit made under the scheme be held? When will the deposit be repaid?

The deposits will be held by the declarant in the form of Bonds Ledger Account maintained with Reserve Bank of India. This deposit scheme has a lock-in period of 4 years and the scheme shall not pay interest on the amount deposited. Hence, deposits will be repaid after a period of 4 years from the effective date of deposit, which will be credited to the bank account of the declarant.

6) Can a person against whom a notice has been issued for an assessment year or a person against whom search/survey operation has been initiated, be eligible for making a declaration under the scheme?

Yes, such a person is eligible to avail the scheme.

7) How will the money generated through income disclosures be utilized by the Government?

The money generated from income disclosures shall be used to improve infrastructure, initiate welfare schemes and develop rural economy. These include projects in irrigation, primary health and education, housing, toilets and livelihood for the benefit of the poor

8) What is the mode of making declaration of undisclosed income?

The declaration should be filed online at https://incometaxindiaefiling.gov.in or in print form to jurisdictional Pr. Commissioner / Commissioner of Income Tax along with proof of payment of tax etc. and deposit under the scheme. The declaration form is also available at branches of authorized banks and the website of Reserve Bank of India.

9) What kind of income cannot be declared under PMGKY scheme?

The scheme is not available for declaration of income which is represented in the form of investment in any asset like jewellery, stock or immovable property. Undisclosed income represented in the form of deposits in a foreign bank account is also not eligible for the scheme. Further, undisclosed income in the form of “Red Money” i.e. proceeds of crime, drugs, terrorism, money laundering cannot be declared.

10) What is the immunity offered to defaulters after income disclosure under PMGKY scheme?

The income declared under the scheme shall not be taxable under the Income Tax Act, 1961 or any other Acts other than those specified in Section 199-O of the scheme. PMGKY allows defaulters to come clean and declarations made under the scheme will be entirely confidential and will invite no prosecution under law. The defaulters will be granted pardon and provided immunity as opposed to higher penalties and criminal charges if undeclared income is found under tax scrutiny or raids.